How To Make a Radial Gradient Sky in Blender Internal?
You may do it using Blend texture with the Quadratic Sphere (or Spherical) progression type.


In World header set its type to Real Sky.


Then go to Texture header and set the texture type to World. Add a new texture and set it as Blend.


In Colors panel check the Ramp checkbox and set the colors transition using sliders. Set the colors interpolation type to Ease also. In Blend panel set the progression type to Quadratic Sphere (or Spherical). In Mapping panel set the coordinates type to AngMap. Experiment with settings below. Check the Horizon box in Influence panel also.


You may also try to set the colors interpolation type to B-Spline and add some sliders with slighty different hue to have a better control over colors transition.